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8/6/2019 Services Management 03
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Services Management
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Service
A service is an act or performance offered by one party to the other.
Although the process may be tied to a physical product, the performance
is transitory, often intangible in nature and does not result in the
ownership ofany ofthe factors ofproduction.
A service is an economic activity that creates value and provides benefitsfor customers at specific times and places by bringing about a desired
change in, or on behalf of, the recipient ofthe service.
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What is Service Quality
Actual performance by the firm
Customer satisfaction= ------------------------------------------
Customers expectations
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The Customers view of service quality
Customer perceptions of the firm and its offer are shaped by:
a) Word ofmouth publicity-like recommendations from friends, relatives,
neighbors and peer group at work place
b) Personal experience on the part ofthe customer
c) Personal needs ofindividual customers
d) External communications like the publicity ofthe firm in the media and
its advertisements and other corporate communications
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a) The quality ofservice or customer satisfaction=service quality delivered
- service expected
b) The value ofa service to a customer= Service quality(both the results
realized and process by which they are achieved)+
price and other customer costs ofacquiring the service
c) Potential profit leverage in providing the service=value to the
customer-cost to the service provider
d) The profitability ofa service to its provider=marginvrepeat
usagezinvestment
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Service encounters or moments oftruth are a dynamic force
with a potential tofuel self-reinforcing relationships.
-To create this self-reinforcing process, one has to understand the two
important players in corporate profitability-the customer and the firm
itself.
Development ofcustomer-oriented policies like guarantees, warranties,
replacements, refund and exchange policies.
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How is Service Quality Measured?
SERVQUAL=(Perception ofan ideal company as measured by the rating
given by the customer on the ten point scale for each variable - (
Expectation or actual service provided by the rating given by the ten point
scale for each variable or for the firm as a whole).
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Planning for Service
Strategic Options
a) Locating service points near the customer
b) Making delivery points user friendly
c) Reducing time gap between service sought and delivered
d) Product design
e) Unconditional guarantee
f) Role clarity and empowering people
g) Customer service and satisfaction is a result ofteam-work
h) Performance measurement and reward systems i) Research
k) Training ofpeople
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Differences between Goods and Services
Goods are tangible and services are Intangible. Services thus cannot be
inventoried or patented or readily displayed. Intangible elements
dominate value creation.
Customers do not obtain the ownership of services. Customers may be
involved in the production process. Goods are normally standardized whereas services are heterogeneous.
Since services are provided by human beings no two services will be
precisely alike. The heterogeneity connected with services is largely the
result of human interaction between the service provider and the
custo
mer. It beco
mes a bit diff
icult to
quantitatively evaluate service. In case ofgoods, the production is separate from consumption whereas in
services the production and consumption is simultaneous. Customers also
participate and affect the transaction.
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Goods are non perishable whereas services are perishable. Mass
production ofservice is very difficult and services cannot be returned or
resold.
Time factor assumes great significance and importance for service.
With regards to goods and services, the distribution channel may assumedifferent forms
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Market positioning
The importance for service firms to adopt focused strategies in their
choice ofmarkets and products
What is the distinction between important and determinant attributes in
consumer choice decisions?
What are the key concepts underlying competitive positioning strategy inservices?
When is it appropriate to reposition an existing service offering?
How can positioning maps help service marketers to better understand
and respond to competitive dynamics?
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Service delivery system
Identifying the primary channels through which services are delivered to
end customers: a) Direct delivery ofservice and b) Delivery ofservice
through intermediaries
Direct or company owned channels
Franchising: Advantages: a) A leveraged business format for greater
expansion and revenues. b) Consistency in outlets. C) Knowledge oflocal
markets d)Shared financial risk and more working capital. Disadvantages:
Difficulty in maintaining and motivating franchisees b) High dispute
between franchisees and franchisers c) customer relationships controlledby franchisee rather than franchiser
Agents and brokers
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Electronic channels: benefits: a) Consistent delivery for standardized
services b) Low cost c) Customer convenience d) wide distribution
e)customer choice and ability to customize f) Quick customer feedback.
Challenges and disadvantages: a) Price competition b) Inability to
custo
mize with highly standardized services c)Lack
ofc
onsistency due t
ocustomer involvement d) changes in customer behavior e)competition
from widening geographies
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New Service Development
When there is a new service development, it has to have the followingfour basic characteristics: a) Must be objective and not subjective b)Mustbe precise and not vague c)Must be fact driven and not opinion drivend)Must be methodological and not philosophical.
Types ofnew services:
Major or radical innovations ( television or computer)
Start up businesses consists ofnew services for a market that is alreadyserved by existing products that meet the same generic needs ( on linebanking for financial transactions)
New services for the currently served market represent attempts toofferexisting customers ofthe organization a service not previously availablefrom the company ( An airline offering fax or internet service duringflights)
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Service line extensions represent augmentations ofthe existing service
line ( An airline offering new routes)
Service improvements represent perhaps the most common type of
service innovation. ( A hotel room having a WIFI zone)
Style changes represent the most modest service innovations althoughthey are highly visible and can have significant effects on customer
perceptions ( revising the logoofa brand, changing the color scheme ofa
retail chain etc)
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Stages in new service development
Business strategy development or review
New service strategy development
Idea generation( screen the ideas against new service strategy)
Concept development and evaluation ( test concept with customers and
employees)
Business analysis ( test for profitability and feasibility)
Service development and testing ( conduct service prototype and test)
market testing ( test the service and other marketing mix elements)
Commercialization
Post introduction evaluation
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